Thailand's property market is poised for significant changes as we approach 2025, with both opportunities and challenges outlined by major real estate consultancies, CBRE and Cushman & Wakefield. A comprehensive analysis shows promising growth particularly within industrial areas and the hospitality sector, driven largely by tourism recovery.
According to CBRE, 2024 sets the stage for recovery trends observable across various property sectors. "The industrial estate sector stands out prominently for 2025," stated Ms. Rungratan Veerapakarnkarn, Managing Director of CBRE Thailand. "We anticipate continued investment in large mixed-use projects, even as some areas face declining demand and increased oversupply. Still, many segments benefit from government initiatives aimed at attracting foreign tourists and investment. The hotel market and industrial space are showing strong upward trends."
This outlook aligns with expectations of 40 million foreign tourists visiting Thailand in 2025, fueling various segments of the market. While the commercial rental market remains resilient, challenges persist for the residential property sector, which is burdened by oversupply.
"The residential market, particularly in Bangkok, remains reliant on domestic demand," Ms. Rungratan noted. "The tight credit conditions for developers and buyers contribute to lower project launches and sales this year. The economic slowdown exacerbates these challenges. Developers must manage existing sales backlog and focus on selling ready-to-move-in units."
Moving forward, high-end branded residences are expected to become more prevalent, catering to both local and foreign clients seeking secondary homes across Asia. The competition within the office rental market is also intensifying, with new developments adding to existing supply. The trend shows rising vacancies as companies adapt to hybrid working models, reducing space requirements by 20-50%.
CBRE's analysis suggests 2024 will see record-high net leasing demand within the office sector, but shifting preferences mean tenants can leverage their position to negotiate lower rents. Rental rates for Grade A office spaces are expected to stabilize at around 950 baht per square meter.
Meanwhile, with new retail spaces expected to flood the market, especially enclosed malls, international brands will continue to dominate prime city locations. Retailer demand from restaurants is surging as new entrants emerge, particularly from Japan and China. “Retail strategies will also lean heavily on mixed-use developments as these formats attract consumers,” noted the report.
On another front, Cushman & Wakefield has identified significant growth opportunities. Gareth Powell, Country Head for Cushman & Wakefield Thailand, highlighted five key sectors of the real estate market set to evolve:
- Foreign Direct Investment (FDI) is at record-high levels, reaching 832 billion baht, as investors flock to opportunities especially within tourism-related properties.
- The industrial and logistics market is seeing strong demand, largely driven by companies relocating their manufacturing bases to Thailand.
- With office buildings totaling 8.78 million square meters, and upcoming supply of 725,000 square meters by 2025, the market will experience heightened competition.
- The retail space is also expected to expand significantly, with 224,000 square meters projected to be added to the existing supply. Projects such as One Bangkok are set to lead this growth.
- Lastly, the condominium market seems to be cooling off, with 21,680 new units launched last year, indicative of fluctuated demand and buyers seeking clear value.
This dynamic indicates not only rising opportunities but also challenges within the Thai property sector as both domestic and international factors influence the market's evolution. Investors and developers alike must navigate through these complicated landscapes to capitalize on potential growth areas.
Meanwhile, the hospitality sector continues to rebound strongly as Thailand lifts visa requirements for citizens from 93 countries, propelling hotel occupancy rates and revenues to record highs. Average Daily Rates (ADR) and Revenue Per Available Room (RevPAR) are also predicted to reach new heights, and with many luxury hotel brands entering the market, the sector is set for remarkable growth.
Thailand’s East Economic Corridor (EEC) remains pivotal for industrial and logistics development, with strong demand for land and factories, particularly from tier 2 and 3 suppliers. Developers are competing to provide modern high-quality facilities to meet the surging needs. The pricing dynamics show land sales at approximately 7.6 million baht per rai, which reflects the invigorated interest from investors, including foreign entities, eager to explore the region.
Overall, the outlook for Thailand’s property market by 2025 appears promising, albeit complex, with multiple sectors showcasing potential for growth amid external market influences and the ever-evolving consumer demands.